News

Target takes a Q2 hit of $148M in costs from data breach

The figure includes estimated probable losses for what the company believes to be 'the vast majority of actual and potential breach-related claims,' including claims by payment card networks.

August 5, 2014

Target Corp. announced its Q2 earnings today — including probable gross expenses of $148 million in costs related to the massive security breach the retail giant experienced during last year's holiday shopping season.

In a news release the company said that this figure includes estimated probable losses for what the company believes to be "the vast majority of actual and potential breach-related claims," including claims by payment card networks. The total will be partially offset by $38 million in insurance, the release said.

“Since the data breach last December, we have been focused on providing clarity on the ompany’s estimated financial exposure to breach-related claims,” said John Mulligan, interim president and CEO and CFO of Target, in a news release. “With the benefit of additional information, we believe that today is an appropriate time to provide greater clarity on this topic.”

The release offered further information about costs related to the breach:

Given the varying stages of claims and related proceedings, and the inherent uncertainty surrounding them, the company’s estimates involve significant judgment and are based on currently available information, historical precedents and an assessment of the validity of certain claims.

These estimates may change as new information becomes available and, although the company does not believe it is probable, it is reasonably possible that the company may incur a material loss in excess of the amount accrued. The company is unable to estimate the amount of such reasonably possible excess loss exposure at this time.

The accrual does not reflect future breach-related legal, consulting or administrative fees, which are expensed as incurred and not expected to be material in any individual period.